The central bank of the Czech Republic cut its benchmark two-week repo rate by 20 basis points to a record low of 0.05 percent.
The board of the Czech National Bank (CNB) also cut the Lombard rate, the ceiling for short-term money market rates that is used to provide overnight liquidity to banks, by 50 basis points to 0.25 percent. The discount rate, the floor for short-term money market rates that is used for overnight deposits at the central bank, was cut by 5 basis points to 0.05 percent.
The CNB will issue a statement later to explain its rate decision. Many economists had expected the CNB to cut its rate further.
The CNB had already cut the repo rate twice this year for a total reduction of 50 basis points. The latest cut brings this year's rate reduction in the repo rate to 70 basis points.
The Czech Republic's Gross Domestic Product contracted by 0.2 percent in the second quarter from the first quarter, after 0.8 percent quarterly drop, for an annual decline of 1.0 percent.
The inflation rate ticked up to 3.4 percent in September from 3.3 percent in August. The CNB targets inflation of 2.0 percent.